Angelo Taningco
Economist, Treasury Group

The Philippine agriculture sector exhibited better output performance in the second quarter (Q2), aligning with our expectation of a pickup in economic growth for that period.

Agriculture’s output volume grew 6.2% year-on-year (yoy) in Q2, better than its first quarter (Q1) growth of 5.3% yoy and a rebound from its last year’s Q2 contraction of 2.2% yoy, according to the latest agriculture performance report of the Philippine Statistics Authority. Crops, which comprised 51% of agriculture output, spearheaded the agriculture sector’s expansion by recording an 11.7% yoy growth in Q2, better than its 8.3% yoy increase in Q1. Favorable weather, adequate irrigation water, and availability of seeds and fertilizers were cited as among the major reasons for the strong crop production in Q2.

Likewise, growth of the poultry subsector (16% share in agriculture) accelerated to 8.4% in Q2 from 1.9% in Q1. The impressive performances of both crops and poultry in Q2 have outweighed the contractions of the other two subsectors—livestock (16% share) and fisheries (17% share) which posted negative growth rates of −1.4% yoy and −2.9% yoy, respectively. (See Figure).

Figure: Agriculture Output Volume, By Subsector
Q1 2015 – Q2 2017
(yoy %)

 
In the national accounts, the agriculture, hunting, forestry, and fishing (AHFF) sector constitutes about 10% of nominal gross domestic product (GDP). We have estimated the AHFF’s output growth in Q1 to have contributed 0.4 percentage points to the quarter’s real GDP growth, which stood at 6.4% yoy. The growth improvement in the agriculture sector has likely increased AHFF’s growth and its contribution to GDP growth. Against this backdrop, we continue to expect a higher GDP growth rate in Q2 vis-à-vis Q1, with our Q2 forecast maintained at 6.5% yoy.

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